Moving into back-to-school season, retail within many youth culture segments is looking grim. One of the worst was today’s announcement that Abercrombie & Fitch’s second quarter net earnings fell a dramatic 52% to $15.5 million.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said: “The second quarter results we are reporting today are disappointing and below our expectations coming into the quarter. In particular, we saw a further deceleration in the trend in our international stores, while our U.S. chain stores also comped negatively for the quarter for the first time since 2009. Our direct to consumer business remained a bright spot, posting its tenth successive quarter with growth of 25% or better.
Our entire organization is completely focused on improving upon the trends we have seen. There are factors beyond our control but, as a team, we believe there are opportunities to do better. We continue to be confident in the global appeal of our iconic brands. This was once again affirmed by the tremendous reception our Hong Kong flagship received at its opening this past Saturday. We remain excited and optimistic about the opportunities ahead of us, and we will be disciplined and judicious in our use of our shareholders’ capital to pursue those opportunities.”
More from the second quarter summary shows that U.S. sales including direct-to-consumer decreased 5% $648 million, with international sales including direct-to-consumer up 31% to $303.4 million.
Total comparable store sales for the quarter decreased 10% relative to last year. By brand, comparable store sales decreased 11% for Abercrombie & Fitch, 10% for abercrombie kids, and 10% for Hollister Co. Total sales by brand were $362.5 million for Abercrombie & Fitch, $76.3 million for abercrombie kids and $485.6 million for Hollister Co.
Store Openings: During the quarter the Company opened a combined Hollister Co. and Gilly Hicks store in London on Regent Street, seven international Hollister Co. chain stores and three international Gilly Hicks chain stores. Subsequent to quarter end, the Company has opened an Abercrombie & Fitch flagship store in Hong Kong.
In their strategic update the following was reported: • A reduction in the expected number of fiscal 2012 international Hollister Co. chain store openings to approximately 30 stores from a previous expectation of close to 40 stores. • A pause in new flagship store commitments, other than a planned Shanghai location. • A reduced run rate for future international chain store openings, with a focus on under-penetrated markets where cannibalization effects are expected to be minimal, and subject to continued approval on a store by store basis. • An updated fiscal 2012 capital expenditure budget of approximately $360 million, and an anticipated fiscal 2013 capital expenditure budget of approximately $200 million. • An update on the Company’s share repurchase plans.
H&M Total Sales Up
Meanwhile, fast-fashion chain H&M reported today, July 15, 2012, that it’s total sales increased by 11% compared to the same month the previous year. Sales in comparable units increased by 2 percent. Comparable units comprise the stores and the internet and catalogue sales countries that have been in operation for at least a financial year.
The total number of stores amounted to 2,603 on 31 July 2012 versus 2,306 on 31 July 2011.
H&M also announced that they are creating nine, 10-foot “Oscar-looking” statues of David Beckham to mark the second David Beckham Bodywear campaign. Starting Thursday through Sunday, they will be displayed in various spots in New York, Los Angeles and San Francisco, and could serve as a lucky charm for some.